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2015 (8) TMI 1010 - MADRAS HIGH COURT

2015 (8) TMI 1010 - MADRAS HIGH COURT - 2015 (39) S.T.R. 975 (Mad.) - Waiver of pre deposit - Denial of CENVAT Credit - input services and capital goods - Held that:- There appears to be a decision of the Andhrapradesh High Court in the case of Commissioner of Central Excise, Visakhapatnam-II Vs. Sai Sahmita Storages (P) Ltd. reported in [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT]. In any event, on this arguable issue, the Tribunal, Ahmedabad Bench had earlier granted waiver of pre-deposit in .....

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ated:- 11-6-2015 - R. Sudhakar And K. B. K. Vasuki,JJ. For the Appellant : Mr. R. Parthasarathy For the Respondent : Mr. A. P.Srinivas - R1 JUDGMENT (Judgment of the Court was delivered by R. Sudhakar, J.) The above Civil Miscellaneous Appeals are filed as against the order of the Tribunal ordering pre-deposit raising the following substantial questions of law: "1. Whether in the facts and circumstances of the case, the Hon'ble Appellate Tribunal was correct in ignoring the decisions of .....

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o pre-deposit ₹ 8 crores, being the credit of duty paid on tower parts and shelters and on input services used for erection and installation of towers and shelters? 4. Whether in the facts and circumstances of the case, the Appellate Tribunal was right in holding that the appellant did not make out a prima facie case for total waiver of pre-deposit? 5. Whether in the facts and circumstances of the case, the impugned order of the Tribunal is sustainable in law?" 2. The brief facts of t .....

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of towers and shelter/prefabricated buildings. The credit so availed on input services and capital goods is utilized for payment of service tax on output service. 3. Two show cause notices were issued for the period April 2010 to March 2011 and April 2011 to March 2012 proposing to disallow cenvat credit pertaining to input services relating to erection and installation of the towers, shelters and construction services and on capital goods pertaining to towers and shelter materials. It also pro .....

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2,002/- 1,46,79,969/- 18,90,11,970/- 5. Aggrieved by the order of the Adjudicating Authority, the assessee filed appeals before the Tribunal along with applications for waiver of pre-deposit. That applications were decided by the Tribunal by a common Order dated 20.11.2014 in the following manner: "5. After hearing both sides, we find that the decision of the Hon'ble Madras High Court as stated by the learned Advocate is in the context of eligibility of CENVAT Credit on capital goods, n .....

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n the case of Navaratna S.G. Highway Properties Pvt. Ltd. (supra) held that input service credit on Construction or Renting of Immovable Property would be eligible. In that case, the Tribunal followed the decision of the Hon'ble Andhra Pradesh High Court in the case of Commissioner Vs. Sai Storage Pvt. Ltd. reported in 2011 (23) S.T.R. 341 (A.P.). 6. Prima facie, we find that the first issue is no longer in favour of the applicant and the issue no.2 is an arguable matter. In view of the abov .....

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ing to denial of cenvat credit on tower and shelter material, the Bombay High Court in the case of Bharti Airtel Vs. Commissioner of Central Excise, Pune reported in 2014 (35) STR 865 (Bom.) held against the assessee. He relied on the other decisions of the Madras High Court to canvass the issue in favour of the assessee. With regard to the second issue relating to benefit of cenvat credit on input services on erection, commissioning of installation service and construction service, learned coun .....

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ring for the appellant is that the appellant is facing financial hardship. In support of this plea, he relied upon the grounds raised before the Tribunal, wherein it was stated that the accumulated loss is ₹ 12,632.40 crores. The grievance of the appellant is that the Tribunal did not consider the said loss and ordered pre-deposit. He relied on the decision of the Tribunal granting full waiver of pre-deposit in respect of the assessee's own case in Miscellaneous Order No.42453 to 42456 .....

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It is basically a structural support to certain equipment and is not used in the premises of the provider of output service. He also submitted that the erection, commission and installation and constructions are not related to output services of telecom services provided by the assessee. Hence, the assessee had incorrectly availed the Cenvat Credit on inputs services used in relation to towers and shelters. On a total demand of 18.90 crores, the Tribunal had only ordered pre-deposit of ₹ 8 .....

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. It is seen that the Tribunal in this case, agreed with the contention of the Revenue that the first issue relating to Cenvat Credit on tower and shelter materials is covered by the decision of the Bombay High Court in the case of Bharti Airtel Vs. Commissioner of Central Excise, Pune reported in 2014 (35) STR 865 (Bom.) and that is justified. Insofar as the second issue relating to input services is concerned, it is stated that the said issue is arguable. We find that on this issue, there appe .....

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t of input services of erection, commissioning or installation service and construction services, the appellant had prima facie case on hand. 12. The next contention is relating to financial hardship. It is seen that the appellant had raised a ground of financial hardship stating that the accumulated loss of the appellant company is to the tune of ₹ 12,632.40 crores. We find much force in the plea of the appellant regarding undue hardship and financial difficulty in pursuing the appeal on .....

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s no legs to stand on, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine manner unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that do .....

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SCC 436 and CCE v. Dunlop India Ltd., (1985) 1 SCC 260 cases without analysing factual scenario involved in a particular case. 10. Section 35-F of the Act reads as follows: 35-F. Deposit, pending appeal, of duty demanded or penalty levied. Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise Authorities or any penalty levied under this Act, the person desirous of appealing .....

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fit to impose so as to safeguard the interests of the Revenue: Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing. 11. Two significant expressions used in the provisions are undue hardship to such person and safeguard the interests of th .....

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t was noted by this Court in S. Vasudeva v. State of Karnataka, (1993) 3 SCC 467 that under Indian conditions expression undue hardship is normally related to economic hardship. Undue which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances. 13. For a hardship to be undue it must be shown that the particular burden to observe or perform the requirement is out .....

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